Improving access to finance for small businesses
The British Bankers’ Association has claimed banks are more willing to lend than a lot of small businesses have been led to believe.
This will be welcome news to many small and medium sized businesses who were previously struggling to access finance or were unsure how to do so.
On the verge of a year-long marketing campaign to assist companies with finance, the BBA discovered only 37% of small businesses are planning to apply for finance.
This is despite more than two-thirds of businesses having their loan applications approved, according to data from the BBA.
The boss of the association, Anthony Browne claimed “Banks are open for business” and added that the campaign aims to raise confidence among SMEs in the UK.
This could boost the growth prospects of around 270,000 companies, some of which are threatened by administration and insolvency, due to a lack of finances.
Mr Browne added that some of the businesses who fail in their applications for funding can appeal the decision, and said that around 40% are usually successful in doing so.
The campaign will specifically target businesses with a turnover of £25 million or less with the aim of increasing access to finance for those who believe they are unable to get it.
Banks made £11.5 billion worth of new loans in the past three months, an increase of 27% on the previous quarter, according to Mr Browne.
However, recent reports, such as the one from the Public Accounts Committee were extra critical of the approaches taken to lending by some banks.
The report highlighted the impact of Funding for Lending and drew on Bank of England figures to suggest a fall in net lending during September and November.
It would appear that the major stumbling block when it comes to accessing finance is as a result of many businesses not understanding what is available to them.
Making these businesses aware of what they can access is important as it lessens the likelihood of corporate restructuring procedures being required.
These can have a dramatic impact on the reputation of a business and can cause several issues among staff if not managed in the correct fashion.